Latest Player in the Food Industry Issues - Example

Business plan Name: Course: Corse code: Tutor: Date: Contents Executive summary 3 Mission 3 Vision 3 Objectives 4 Company summary 4 Company ownership 4 Start up summary 4 Products and Services 5 Market Analysis Summary 5 Shop location 5 Risk assessment 6 Procurement and management of firm resources 6 Staffing 6 Recruitment and Promotion of Personnel 8 Recruitment 8 Training 9 Promotion 9 Remuneration and Incentive 9 Market segmentation 10 License and Permits 10 Support Service 11 Banking services 11 The Legal services 11 Insurance services 11 Financial plan 12 Assumptions 12 Break-even analysis 13 Projected Profit and Loss 13 Projected Cash Flow 15 Projected cash flow for second and third year 16 Projected Balance Sheet 17 Reference list 19 Appendix 20 Executive summary Pizsho, name of the shop, is the latest player in the food industry. The shop is located in a very comfortable, populous town with very strong desire for extra dining options. Having been motivated by the anxious and needy families for quality food services, the shop is strategically located in the town to take the privileges of the hungry population, especially the families. This business plan therefore calls for an interesting, profitable establishment with a future anticipation of growing to serve the needy society. Above all, this business plan gives a clear description of a healthy food industry with well established prospects, looking forward to gaining an international popularity. Mission Pizsho has a mission of creating a pleasant and responsive environment for the esteem customers in a productive and well designed atmosphere that facilitates a good work place for all people. Vision To be the leading food industry that creates and nurture creative, healthy and respectable environment that people can sit, relax and enjoy the best foods in the region. In striving to achieve this, it ensures that the workers are fully compensated and motivated to respect the customers and produce quality pizzas. Objectives The objectives of Pizsho are: i. To maximize profits at any given time. ii. To create a stable market place able to sustain sales and marketing goals Competitive advantage This will give Pizsho an upper hand over its competitors and generate a better value to the shareholders and the firm. Essentially, the more the competitive advantage, the more complex it is for the market rivals to neutralize that advantage. The shop will have vast sources of competitive advantage. These include: i. Strong research and growth capabilities ii. Distribution or restricted re-selling rights iii. Having superior products and services Company summary Pizsho is a private shop dealing with the sale of pizza. It offers special menu that does not currently exist in the region. The target groups are the students and young families in the area. Company ownership The stakeholders of the shop will be Mr. and Mrs. Jean Paul and are the owners of the business. The shop will be registered as Limited liability Company. Start up summary The start-up cost will include of renovation of the site, professional fees and other start-up expenses. The owners will directly meet these costs. However, they will supplement by loans from banks, private investors and from friends. The assumptions are as shown in the figure below. Products and Services Pizsho provides the best quality pizza to the local community and town dwellers which at the moment, has limited access to the food shops and restaurants. At the commencement, the shop will provide supper daily from Monday to Saturday. It opens at 5.00 am in the morning and close late at night at 10 pm. Sunday will be closed to allow the workers to relax and worship. However, the shop will be very flexible to accommodate all the customers, even those who come early or arrive late. Market Analysis Summary The main target market is the local people who have great desire for family oriented and comfortable atmosphere for dine-in pizzeria. Nevertheless, the secondary target market is pizza delivery to other industries. Shop location The shop is located strategically next to central business district with easy access to many people. The shop is very spacious with modern a lot of room for parking and recreation. This will facilitate ease of flow of operations. Risk assessment Pizsho is prepared to take risk and venture into the market. At its initial stage, the business will employ very competent workers, experienced in catering and hospitality. a. Deciding who/what may be a victim and how b. Risk evaluation and deciding on precautions c. Recording the outcome and implementing them d. Reviewing the assessment and updating where need be. Procurement and management of firm resources Pizsho has put in place managers that control the flow of resources. The procurement manager, for instance, ensures the purchase of firm’s requirements. He is entitled to all the purchases and is answerable to the general manager. The manager ensures proper utilization of resources without any wastage. Staffing Manager Qualifications a. Holder of bachelor degree in human resource management/ business administration b. Computer literate c. Good communication skills Duties and responsibilities a. Managing all the affairs of the business b. Assign other staff duties Human resource manager Qualifications Hold bachelor degree in human resource management Computer literate Qualifications Hold bachelor in purchasing and supply Computer literate Duties Procure all the business materials, equipment and goods Keep procurement records Chefs Qualifications a. Hold at least diploma in food and catering b. Have a certificate of public health c. Have experience in hospitality industry Duties a. Prepare food b. Serving of customers Security officers Qualifications a. Have a certificate of good conduct b. Hold at least a certificate in criminology/public administration/security services from a recognize institution Duties a. Provide security to the business premises Recruitment and Promotion of Personnel Recruitment This refers to the efforts made by the enterprise in attracting and finally engaging the workforce in the specific assignment. In the conceptual stage, the business will consider applicants as a source of recruitment. These will comprise of people who will personally come to work for the reliable job opportunities and others who will approach the proprietor through letters or cell phone Reasons for recruitment will be To find and employ best qualified persons for every job To retain the most promising of those hired To offer promising opportunities for lifetime working learners To improve the program and facilitates for personnel growth on the job The initial recruitment will be considered and it will include permanent workers, present casual or retired employees. These sources will be preferred because of the following reasons a. Morale of the employees can be improve b. Cost of selection can be minimized Training The owner of the proposed business has the obligation of training the staff for effective execution of services and meeting the business goals. The initial recruitment will be considered and it will include permanent workers, present casual or retired employees. These sources will be preferred because of the following reasons a. Morale of the employees can be improve b. Cost of selection can be minimized Promotion Workers will receive promotions basing on: a. Academic qualifications b. Professional excellence c. Loyalty and honesty Remuneration and Incentive This is payment of services rendered. This will come in the form of salaries and wages and associated allowance such as house, medical. The owner of the proposed business intends to adopt a competitive pay system so as to avoid a situation where its staff will be poached by existing and upcoming competitors. Employees will be rewarded or remunerated depending on individual performance. Market segmentation The city dwellers and the neighboring communities are among the market segmentation. However, only the outskirts residents are among the delivery, since the delivery diameter is seven kilometers from the central business district of the town. Approximately 60% of the target population lives within the radius of 3 km. Pizsho’s strategy is entirely based on providing the best customer value proposition within the niche market. Currently, there are a thousand and one families with continuous demand of dining facilities. The shop therefore strives to provide the town and its outskirts the best choice of food options. The services are mostly offered by the vendors which deal with email newsletter software, giving the business organization an opportunity if integrating advertising messages in the transaction mails. Other software companies have specialized in offering state of the art marketing services for transactional emails. Such services include facilitating personalized and targeted transaction messages in addition to the customer referral marketing campaign (Raulas & Merisavo, 2003). The services provided via stores and internet to enhance development. This is basically as a result of effective information sharing, interactivity and instant feedback on product and services via social media platforms like facebook and twitter. License and Permits The owner of the business will seek license from various local authorities for smooth business operation. The following legal requirements will be required at the start of the business DESCRIPTION COST (£) i. Certificate by ministry Health 100 ii. Ministry of local government 180 iii. Trade license 720 TOTAL 1000 Support Service The proprietor will require other support services such as banking services, legal services, and audit and insurance services Banking services The proprietor intends to open an account with the Family Bank The Legal services The proprietor intends to appoint a lawyer who will be expected to give legal advice. His contacts will be Experts & CO. Advocates Ltd. Insurance services British Insurance Company will be preferred as an insurance company to insure the premises against theft, fire and nevertheless, the workers will be insures under medical insurance for the sake of their health. Sales Forecast (£)   Year 1 Year 2 Year 3 Sales   Pizza 133,900 143,808 153,875 Breadsticks 18,667 19,973 21,371 Beer 37,333 39,947 42,743 Drinks 50,773 54,327 58,130 Total Sales 240,673 258,055 276,119 Direct Cost of Sales Year 1 Year 2 Year 3 Pizza 42,848 44,990 47,240 Breadsticks 3,733 3,920 4,116 Beer 7,467 7,840 8,232 Drinks 2,539 2,666 2,799 Subtotal Direct Cost of Sales 56,587 59,416 62,387 Financial plan The picture of financial projections is quite interesting. At initial stage, the business will invest most on own asset and reluctant to take loans. Nevertheless, the business will apply for loans from various financial institutions. Assumptions a. The financial plan will entirely depend on some assumptions, a few of which are listed below. b. There will be a fairly high growth of pizza economy in town, provided that there is no competition in the region. c. There is insignificant effect on technology changes which may render the business and its products and services obsolete. d. The available equity capital will sustain and finance all the business activities comfortably as shown in the table: General Assumptions Year 1 Year 2 Year 3 Plan Month 1 2 3 Current Interest Rate 7.0% 7.0% 7.0% Long-term Interest Rate 6.0% 6.0% 6.0% Tax Rate 20.00% 20.00% 20.00% Others None Break-even analysis The beak-even analysis is majorly based on the ‘burn-rate’ costs incurred in maintaining the business and running costs. The most essential insight is the fact that sales are stable enough to run above the break-even point. Projected Profit and Loss The business expects a commendable profit during the first year of its inception, with huge gains at the subsequent years. Projected Cash Flow The table below shows projected cash flow for the first year Sales Forecast     Jan Feb Mar May Jun Jul Aug Sep Oct Nov Dec Sales                         Pizza 0% 7,230 12,702 11,260 11,460 11,360 11,880 11,140 11,380 11,840 12,500 11,741 Breadsticks 0% 1,120 1,555 1,651 1,599 1,578 1,662 1,650 1,622 1,607 1,667 1,717 Beer 0% 2,400 3,600 3,170 3,133 3,150 3,223 3,105 3,293 3,223 2,963 3,203 Drinks 0% 2,750 4,770 4,416 4,329 4,384 4,465 4,216 4,465 4,397 3,989 4,397 Total Sales   13,500 22,627 20,497 20,521 20,472 21,230 20,111 20,760 21,067 21,119 21,058 Direct Cost of Sales                         Pizza 32% 2,324 4,032 3,571 3,667 3,699 3,786 3,581 3,621 3,720 3,875 3,825 Breadsticks 20% 300 353 311 318 305 338 312 318 333 303 353 Beer 20% 420 720 630 657 660 647 630 667 646 597 677 Drinks 5% 136 238 211 216 214 223 211 223 220 199 220 Subtotal Direct Cost of Sales   3,180 5,343 4,723 4,858 4,878 4,994 4,734 4,829 4,919 4,974 5,075 Projected cash flow for second and third year   Year 2 Year 3 Cash Received     Cash from Operations     Cash Sales 258,055 276,120 Subtotal Cash from Operations 258,055 276,120 Additional Cash Received     Sales Tax, VAT, HST/GST Received 0 0 New Current Borrowing 0 0 New Other Liabilities (interest-free) 0 0 New Long-term Liabilities 0 0 Sales of Other Current Assets 0 0 Sales of Long-term Assets 0 0 New Investment Received 0 0 Subtotal Cash Received 258,055 276,120 Expenditures Year 2 Year 3 Expenditures from Operations     Cash Spending 112,206 117,576 Bill Payments 124,835 125,753 Subtotal Spent on Operations 237,041 243,329 Additional Cash Spent     Sales Tax, VAT, HST/GST Paid Out 0 0 Principal Repayment of Current Borrowing 0 0 Other Liabilities Principal Repayment 0 0 Long-term Liabilities Principal Repayment 10,000 9,000 Purchase Other Current Assets 0 0 Purchase Long-term Assets 0 0 Dividends 0 0 Subtotal Cash Spent 247,041 252,329 Net Cash Flow 11,014 23,791 Cash Balance 18,844 28,608 Projected Balance Sheet Pro Forma Balance Sheet   Year 1 Year 2 Year 3 Assets       Current Assets       Cash 40,000 58,886 98,698 Inventory 1,720 1,836 1,806 Other Current Assets 5,350 5,350 5,350 Total Current Assets 47,070 66,072 105,854 Long-term Assets       Long-term Assets 25,300 25,300 25,300 Accumulated Depreciation 2,240 3,978 5,328 Total Long-term Assets 23,060 21,322 19,972 Total Assets 70,130 87,394 125,826 Liabilities and Capital Year 1 Year 2 Year 3 Current Liabilities       Accounts Payable 9,267 9,454 9,967 Current Borrowing 0 0 0 Other Current Liabilities 0 0 0 Subtotal Current Liabilities 9,267 9,454 9,967 Long-term Liabilities 19,000 9,000 0 Total Liabilities 28,267 18,454 9,967 Paid-in Capital 46,000 46,000 46,000 Retained Earnings -25,850 -2,367 2,795 Earnings 23,483 30,278 36,739 Total Capital 43,633 73,911 85,534 Total Liabilities and Capital 71,900 92,365 95,501 Net Worth 40,000 40,000 40,000 Reference list Finch, B., 2013. How to Write a Business Plan. Sydney: Cambridge University. Fiore, F., 2007. Business Plan. Write a Business Plan in No Time, 1, pp.231-49. McKeever, M., 2012. How to Write a Business Plan. New York: Sage. Pinson, L., 2008. How to Prepare a Business Plan. Chicago: Cambridge. Rhonda, A., 2003. The Successful Business Plan. NY: Cengage. Rogoff, E.G., 2010. Bankable Business Plans. Expert Solutions to Everyday Life, pp.34-67. Stutely, R., 2012. The Definitive Business Plan. London: Macmillan. Appendix Pro Forma Profit and Loss   Year 1 Year 2 Year 3 Sales 242,673 269,056 287,123 Direct Cost of Sales 56,587 60,416 62,387 Other Costs of Goods 0 0 0 Total Cost of Sales 56,587 60,416 62,387 Gross Margin 186,086 208,640 224,736 Gross Margin % 76.68% 77.55% 78.27% Expenses       Payroll 107,730 113,016 118,576 Sales and Marketing and Other Expenses 7,356 7,356 7,356 Depreciation 2,023 1,986 1,692 Rent 14,430 14,430 14,430 Utilities 7,440 7,440 7,440 Insurance 4,400 4,700 5,100 Payroll Taxes 8,134 8,646 9,007 Maintenance 200 55 55 Other 0 0 0 Total Operating Expenses 151,713 157,629 163,656 Profit Before Interest and Taxes 34,373 51,011 61,080 EBITDA 35,676 47,791 56,367 Interest Expense 1,167 727 621 Taxes Incurred 10,004 13,976 16,745 Net Profit 23,202 36,308 43,714 Net Profit/Sales 9.56% 13.49% 15.22% Read More